3rd-party referral firms send dealers the most Internet leads

To see the 2002 Ward's e-Dealer 100, click here. Requires Adobe Acrobat Reader For free download, click here. Third-party online lead referral services still send the most Internet leads to the nation's top e-dealership operations, according to the 2nd annual Ward's e-Dealer 100. But dealer opinion of those third parties seems mixed. Some dealers shun them. Others use them begrudgingly but plan to

Third-party online lead referral services still send the most Internet leads to the nation's top e-dealership operations, according to the 2nd annual Ward's e-Dealer 100.

But dealer opinion of those third parties seems mixed. Some dealers shun them. Others use them begrudgingly but plan to wean off them. Others find them an effective way to supplement sales.

Ken Smith, whose store ranked first on this year's Ward's e-Dealer 100, relies only on his Web site for leads. He is signed up to receive leads from manufacturer sites, only because they're free. "We'd be crazy not to," he says.

Paul Miller, Internet manager for Capital Ford, in NC, (ranked 10th) still uses the third parties.

But he says, "I'm seeing our Web site drive leads more and more. We are definitely less dependent on the buying services."

One reason for that is that dealers' and manufacturers' Web sites are getting better at driving traffic.

"They certainly have a handle on it now," says Miller. "We're in the midst of redesigning our site - offering more services, like research and information."

Miller believes by offering the same services to consumers as third parties do, he'll get the Internet customers first, and his dealership will avoid paying the referral fee.

That's not to say dealers are abandoning third parties.

Sixty-one percent of dealers were signed on with third parties in 2001 as opposed to 55% in 2000, according to a J.D. Power and Associates study on dealer satisfaction with online buying services.

Mirza Thomas, Internet director for the Jim Koons Automotive Group, says she's looking to focus on used cars this year, and planning on sites such as AutoTrader.com, CarsDirect and Cars.com to help her do that.

Dealers still should consider third parties as part of their Internet strategy, says Paul Rogers, the Cobalt Group's senior training manager.

"For rural dealers, third parties can be especially helpful," he says. "They can really help level the playing field and help dealers extend their reach."

But, he adds, "Dealers need to be judicious about them and look for what works. I've seen dealers spending $800-$900 on leads and selling less then 100 vehicles a year, and that's crazy."

According to most industry surveys, including the Ward's e-Dealer 100, third parties still drive the most leads but the closing ratios for leads from the dealers' Web sites and OEM sites are higher.

Dealers on the Ward's e-Dealer 100 received 51% of their leads from third parties and closed 11% of them, while the closing ratio for the dealers' Web sites was 20% and from the OEM, 17%.

Despite dealers' misgivings about third parties, research indicates that customers prefer going to them first - specifically when looking for pricing, according to a J.D. Powers study.

The study says Kelley Blue Book (www.kbb.com) was the most visited site, and Edmunds.com was considered the most useful.

Autobytel, Inc., with its Autobytel.com, AutoWeb and CarSmart sites, initiated the most online sales in 2001.

More dealers on the Ward's e-Dealer 100 used AutoVantage than any other site. Its close partnership with AutoNation Inc. added to its number - 34 of the 58 dealerships using AutoVantage were AutoNation stores.

AutoTrader.com was next with 44 stores; while 43 dealers used at least one of the Autobytel, Inc. sites.